In the run-up to this week’s mid-term elections (November 2) that will determine control of the United States Congress, politicians on both sides were outdoing each other, demonising China for job losses and economic sluggishness in dozens of hotly contested seats.

The strategy is understandable and is not unique to American politicians: Voters all over the world are angry over joblessness and the sharp drop in living standards and rise in poverty for millions of working families since the onset of the global financial crisis in 2008.

Whether they are transport workers in Paris, unemployed auto workers in Wisconsin or street vendors in Kingston — wherever they are — they share a deep distrust of the world’s political and financial elite who got them into the present predicament and whose only answer seems to be to place most of the burden of recovery on the backs of those least able to bear the load. Or they blame ‘others’.

So we have the spectre of American politicians promising to bring back jobs that have been ‘exported’ from the USA to China. They are also threatening sanctions if the Chinese authorities do not quickly and substantially revalue their currency, making Chinese goods more expensive abroad and – they hope – giving American workers a chance to compete.

During my recent trip to China, a young American lawyer with a US trans-national firm in Shanghai seemed unperturbed by the threat of trade and other sanctions, describing it as “political theatre” to be replaced by serious diplomatic and other exchanges after Tuesday’s vote.

Regardless of the election outcome, the political hot air across a decaying rust belt in America’s heartland that used to be the centre of global manufacturing will not bring those jobs back. They are gone forever. It is the nature of economic history. It is the nature of globalisation.

As Wen Jiaboa, the Chinese prime minister said in a recent interview with Fareed Zakaria on CNN, “Many of the Chinese exports to the United States are no longer produced in the US, and I don’t believe that the United States will restart the production of those products, products which are at a low-end of the value-added chain.”

According to Wen, even if the US does not buy those products from China, they will “still have to buy them from India, Sri Lanka, or Bangladesh, and that will not help resolve the trade imbalance between our two countries”.

Hence, the real issue about jobs and the relative values of the world’s major currencies isn’t about returning to a past that is gone forever, but has to do with the nature of the relationship between the United States and a rising China with enough economic and military muscle to influence the global agenda.

China is seen in much of the developing world as a successful model of poverty alleviation and an alternative model to the ‘Washington Consensus’ of free markets, liberal democratic politics and IMF-imposed fiscal restraints.

Within Asia, China has been exerting greater diplomatic and economic influence. While I was there, Beijing got Tokyo to back down in a stand-off over Japan’s detention of the captain of a fishing boat said to have strayed into Japanese territorial waters.

Part of the pressure on Japan was the withholding of export of what is known as ‘rare earth minerals’, a crucial raw material in high technology goods such as guided missiles, and clean energy including solar panels and wind turbines.

The US wants to punish China?

In an opinion article in China Daily (September 15) Yao Yang, professor and director of the China Centre for Economic Research at Peking University, argued that there was no economic justification for US insistence that the Chinese yuan should be revalued by 20 per cent.

Citing a joint study by Chinese and American scholars, Yao showed that a 20 per cent revaluation would increase American employment only marginally (0.16 per cent); raise American consumption by a mere 0.2 per cent and GDP growth by just 0.16 per cent.

By contrast, such a sharp rise “will hurt the Chinese economy severely”, he said, adding that employment and domestic consumption in China will fall by 3.03 per cent each and its GDP will drop by 3.18 per cent.

Yao concluded, “So it does not make much sense for the US to demand a large revaluation of the yuan unless it just wants to punish China. And if that is the case, it is perfectly reasonable for Chinese policymakers to firmly reject the American demand.”

Chinese commentators like Yao see the quarrel over the value of the yuan as part of a broader American desire to slow the economic juggernaut and, if possible, reverse the trajectory which-according to many projections-will make China the world’s largest economy with some 30 per cent of global economic output by 2030.

Some Western thinkers, particularly those on the right, believe that it is in the interest of Western civilisation for the United States to do whatever is necessary to retain its global dominance as long as possible.

For example, this is the perspective running through a new book, The Rise of China: Essays on the Future Competition, where several scholars argue that the problem for Washington was not merely the rise of China as one of the world’s largest economies. “It is the rise of the People’s Republic of China (PRC) that concerns us.”

Robert Kagan, in one of the essays in the compilation, compares attitudes to a rising United States at the start of the 20th century with attitudes towards China at the start of the 21st.

He writes, “As ambitious as the United States was at the turn of the 20th century, Great Britain, the then pre-eminent global power, could tolerate America’s rambunctious and assertive policies in this hemisphere and elsewhere more easily because the two countries had more in common politically and culturally than not. That cannot be said of the US and the PRC.”

But American policymakers cannot re-use the strategies deployed to contain and eventually defeat the Soviet Union.

For starters, the Chinese economy is embedded in the global economy and strategies to weaken it deliberately would have consequences for the US and the rest of us. As Premier Wen pointed out in the CNN interview, “The Chinese economy and the US economy are closely interconnected. Our bilateral trade has already reached $300 billion. US investment in China has exceeded $60 billion. China has purchased US ‘T’ bonds worth about $900 billion.”

Second, the Chinese are unlikely to follow the path of Gorbachev in the Soviet Union and will only undertake moderate reforms that can be controlled by the authoritarian political system.

They are also changing leaders in an orderly fashion evidenced by the process already underway in the Communist Party to transfer from President Hu Jintao to his anointed successor, Vice-President Xi Jinping in 2012. The leadership is wary of changes that could hobble China’s growth or disrupt its carefully crafted foreign policy.

What will Washington do? The New York Times reported last week that “The Obama administration, facing a confrontational relationship with China on exchange rates, trade and security issues, is stiffening its approach toward Beijing, seeking allies to confront a newly assertive power that officials now say has little intention of working with the United States.”

These measures include reinvigorating cold war alliances with Japan and South Korea, and shoring up US presence elsewhere in Asia including India and Vietnam.

China will, of course, seek to counter these steps. Writing in China Daily (September 7) Wang Yusheng, executive director of the Strategy Research Centre of China, insisted that Beijing will resist American pressure to control the region. The Asia-Pacific sky, he noted, “belongs to only the countries which live under it”.

Resolution of the Sino-American dispute in a way that benefits all humanity requires at least three interventions. First, responsible leaders must avoid facile explanations for short-term political gain; second, every effort must be made to avoid conflict by miscalculation; third, small countries like Jamaica must be smart enough to identify and promote those things that are in our best interest and do not get caught in the cross hairs.

kcr@cwjamaica.com